Asia

German companies gaining ground in Malaysia

The ASEAN Free Trade Area (AFTA) covers 500 million consumers and has growth rates that industrialized nations can only dream of. Many German companies find Malaysia an attractive market.

Alexander Stedtfeld, the executive director of the Malaysian-German Chamber of Commerce and Industry

Malaysia is the third most important ASEAN market for Germany after Singapore and Indonesia. The country is currently trying to rid itself of its role as a workbench for Western electronics manufacturers.

Kuala Lumpur is trying to get away from its role as a workbench for electronics manufacturers

Moreover, the government wants to reduce its dependence on oil and gas, which generates some 45 percent of the country's economic activity. It wants to develop its manufacturing industry sector instead. Alexander Stedtfeld is the executive director of the Malaysian-German Chamber of Commerce and Industry.

"If you consider that Malaysia gets 40 percent of its energy from gas, it's far too high. That's why we see our chances in renewable energies and a real market is going to develop over the next year."

Huge potential

In March, the Malaysian government introduced a feed-in tariff law for energy, which is due to come into effect in 2011.

The German solar technology company Q Cells recognized the potential and set up a production unit not far from Kuala Lumpur a year ago. Some 400 workers produce solar cells.

"The case of Q Cells is interesting because it wants to develop," says Stedtfeld. "It sees Malaysia as a center which it can build up and become interdependent with other companies. If they make solar panels they need the right glass panels so they need a good glass industry and other suppliers.

"The basic structures are there and whether it is successful depends on a few more factors but I am optimistic that the Malaysian government will recognize this chance and take hold of it."

The German company Q Cells has about 400 workers making solar cells in Malaysia

Healthcare industry

Moreover, Malaysia also has a big healthcare industry and many private clinics. The country may have a very young population but even here people are getting older and older.

Kuala Lumpur and other Malaysian cities are seen as having the right infrastructure for foreign companies

Those Malaysians who are becoming wealthier also want good medical care. The German medical technology manufacturer B. Braun Melsungen has been in the country for over 30 years and has about 5,000 employees. It is thus one of the most important employers in Malaysia, says Stedtfeld.

"This company is not only very involved but also considers the prospects for the future as positive in Malaysia. They are located in Penang, which is two or three hours by car north of Kuala Lumpur, on an island that is also a big tourism center. They decided to invest another 60 million there in order to develop their range of products and also to develop their Research & Development department in Malaysia."

The German car industry, however, will have to wait until it can build a complete production work in an ASEAN state. Because the car industry will still be strongly regulated despite the free trade zone.

"It does not make sense for German companies to have proper car factories in the ASEAN region yet," says Stedtfeld. "They need to produce about 50,000 units and there simply isn't a market for that."

However, he is certain that the markets will be opened with time. He predicts the final barriers will be removed between 2015 and 2020.